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How to do a technical crypto forecast?

How to do a technical crypto forecast?

  • 19 July 2021
  • 389 View

Crypto forecast is complex and confusing. It is difficult for traders to decide when to buy and when to sell. Technical analysis is the most important way to aid traders. Traders identify buying and selling points by analyzing price charts.

Most technical analyzes are given to help traders crypto forecast, publish price charts of the top 10 currencies in the market with lines and symbols drawn on each currency.

Most charts are based on Japanese candlestick charts that show the price of currencies against the US dollar. The data on these charts for skilled people show how recent events have affected the price of currencies.
For crypto forecasting for at least the next few months, we need to look at this volatile market in two ways:

  • Market excitement or behavioral economics,
  • Analysis of trading volume charts.

How can do crypto forecasting by technical analysis?

This type of analysis is based on identifying trends based on past events. Analysts analyze price movements, price history, and volume fluctuations through technical analysis. They use indicators and oscillators in this study.
Technical analysts believe that prices are following the trend and history is repeating itself. However, based on technical analysis, crypto forecasting is like weather forecasting and it is not possible to say exactly what will happen.

How can do crypto forecast by fundamental analysis?

In this type of analysis, analysts take a different approach and instead of looking at the trend of price movement, they look at the factors and conditions that cause prices to rise or fall.

These factors include the state of the economy and industry, the way the company is managed, and the fundamentals of the business. In this method of the crypto forecast, analysts show that the market may not understand the intrinsic value of a cryptocurrency and its price is lower than its value.

It is also possible that the price of a currency is higher than the intrinsic value of that currency being traded.
The fundamental analyst believes that the difference between price and intrinsic value will eventually disappear. In other words, a currency that has a fundamental value but is traded at a low price approaches its intrinsic value and rises. Conversely, if a currency has a price higher than its intrinsic value, it will experience a price decline.

Does sentiment analysis effective on the crypto forecast?

In sentimental analysis, an attempt is made to identify the key market players and their behavior. These factors that have a major impact on the market include the media, market influential people, wallets (equivalent to major stockholders), and any other factor.

The analysts of market emotions believed that only data and charts cannot do a crypto forecast, but also trends such as fear-based mass sales or emotional purchases are effective.

Does sentiment analysis effective on the crypto forecast?

Charts for the crypto forecast

How do reading price charts help crypto forecast?

At first glance, charts may seem complicated, but if you learn to read charts, you will find that reading charts are easy. The charts you see on analytics sites and exchanges are known as candlesticks. Candle charts have certain rules and principles that are beneficial for crypto forecasts. In technical analysis, you should always keep in mind that to view daily, weekly, or monthly price changes, you must select the appropriate period for the chart.

For example, if you place the chart on a daily time interval, each candle will represent a trading day. Of course, the daily chart is not a good option for hourly or minute trading. The advantage of candlestick charts is that they indicate the full details of fluctuations in crypto assets over some time. The special shapes of candlesticks show these details.

What are the important patterns in a candlestick chart?

Important patterns in candlestick charts help crypto forecast. They are:

  • Hammer pattern: A hammered candlestick chart indicates that the price experienced a sharp drop before closing at the end of the period but has recovered. This candlestick pattern indicates that the selling pressure on the relevant digital asset has been high during the trading period, but buyers have been able to increase the buying pressure to bring the price back.
  • Shooting star pattern: This pattern is very similar to the inverted hammer, but its use is different. This pattern often forms when prices rise but are likely to start falling.
  • Hanging man pattern: This pattern arises when the bullish market weakens. This candlestick is formed after an ascending period. The long low shadow indicates the selling pressure, which indicates the end of the uptrend. Note that to have a clear crypto forecast, you must look at candlestick patterns in both long-term and short-term charts.

These patterns should not be considered as a sign of a rising or falling market alone, but other factors should be considered to confirm the crypto forecast.

  • There are other patterns in the candlestick. Besides, setting a profit and loss limit in any situation is one of the most important and main tasks of an advanced trader.

What are the important patterns in a candlestick chart?

Types of candlesticks

How to read a candlestick chart?

To perform crypto forecasts from a candlestick chart, you need to be familiar with its tools. The green color of the candlestick indicates that the price is rising during the day. The thin line at the bottom of the candlestick indicates the lowest price recorded for the encrypted asset during trading. The thin line at the top of the candlestick shows the highest price the crypto has reached. The bottom line of the rectangle shows how much crypto has been traded as the market opens. The top line of the rectangle of candlestick shows the price of the crypto when closing.

The red color of the candlestick indicates that the price is decreasing during the day. There is all the above about red candlesticks, but everything is reversed. That is, the thin line at the top of the red rectangle shows the highest price of the day, and the thin line at the bottom of the red rectangle shows the lowest price.

The trading session, shown in bold, indicates where the exchange rate was when the markets opened and closed.
The candlestick chart is a very interesting invention that has been tested and used for centuries for crypto forecasting and other assets. Because prices fluctuate so much in the crypto market, most charts showing a candlestick for one hour during the day are often used.

How to read a candlestick chart?

Elements of candlestick

How to use other analytical techniques?

Those who want to do crypto forecasts do a lot of analysis to find trends. A very common method is to draw trend lines. Most analysts try to identify trends that can follow the overall market trend. By drawing trend lines, the analyst tries to determine the current trend amid market fluctuations.

In an uptrend, there are always new ceilings and a downtrend is always creating new peaks. Trend lines in the chart try to ignore jumps or excessive declines in cryptocurrency prices. Trend lines show an upward trend in conditions where prices are rising or a downward trend in conditions where prices are falling for a few days.

To perform crypto forecast, trend line drawing can be combined with the detection of candlestick patterns. In this way, it is possible to check the possibility of change or continuity of the process. The trader then decides whether to enter into a trade or not. Using trend lines helps you determine if the trend is continuing or ending. It also allows traders to make decisions about their short-term strategy.

How to use other analytical techniques?

Tools for technical analysis

What is another strategy to do crypto forecast?

Another strategy is the moving average that is very similar to the trend line is moving averages. Moving averages ignore price fluctuations and give the trader a better view of the current state of the trend. This strategy involves reviewing and tracking the typical prices of a cryptographic asset over a while.

This period can be a week, 10 days, a month, or more. Comparing moving averages over a shorter period with a longer period can reveal new trends. It also gives you the ability to identify significant levels of recent growth or decline. This increases the ability of crypto forecasting. It is a feature that long-term statistical analysis cannot do easily.

Do we have to rely on technical analysis for crypto forecasting?

Technical analysis is one of the most widely used and effective analytical methods, it is better to consider other methods as well. With technical analysis, you do not get any basic information, and the technical analyst only pays attention to the price and the chart. Hackers’ activities, changing laws in countries and geographies, significant positive and negative news, corporate deals, and new products can all affect the price of cryptocurrencies. You need to use several analytical methods to make the right decisions.

Do we have to rely on technical analysis for crypto forecasting?

Technical analysis

Is there a tool that simplifies the analysis of market movements?

For beginners and semi-skilled people, staring at charts all the time is tedious and they may not be able to do crypto forecasts. In this case, it is better to look for alternative and simpler options.
You can find regular analysis of price charts on various cryptocurrency forecasting websites. They prepare material for you in writing and present the possibility of changes.

Of course, different analysts interpret data in different ways, and you may not find two analysts who have the same analysis. Because each analyst chooses trends based on his research and studies. It is a good idea for users to follow the crypto market news as much as they can. As a result, they can gain a broader view of the market so that they can more confidently compare the analyses of the analysts and get the right results. The correct result can help them make a crypto forecast.

It can also be hard to understand what is happening in the crypto market in an instant as you read charts and articles. You can go to websites like Coin360. The analysts of this website help users to better understand the current market situation and prices in a simple and accessible way.

The dimensions and colors of the rectangles shown on this website of cryptocurrencies are an indication of the size or market value of that currency. The green and red colors used in this chart help to do crypto forecasts. The green color indicates that the crypto has risen in price, and the red color shows that the currency has fallen in price. Except for an increase or decrease in price, the percentage change in the price of that currency is shown in the hour, day, week, or month. Traders can observe price fluctuations for each currency over a while. They can also download historical information about a currency upon request.

Is there a tool that simplifies the analysis of market movements?

Analysis of market movements

Bitcoin and its effect on the crypto market

In the 2010s, the cryptocurrency market was one of the best-performing ones. For instance, Bitcoin experienced 9,000,000% growth and ranked as the best investment asset of the decade. This astonishing growth means that BTC holders, i.e., those who invested in the early days of Bitcoin and were patient enough to hold their investments during the long period of price fluctuations, now enjoy tremendous profits.

Everything about the Crypto Forecast

BTC chart

In investing and trading cryptocurrencies, you are speculating about the upcoming value of the respective digital coin, or put differently, trying to Crypto Forecast/ predict its price in the near or long future. For example, if you are trading Bitcoin, you attempt to predict/forecast whether the asset’s price will rise or fall in the market. Based on this speculation or forecast, you will have a buy or sell order. If your prediction is correct, you will make a profit on your cryptocurrency trade.

On the other hand, with the help of the appropriate crypto forecast, you can also profit when the price of a cryptocurrency lies in a bearish trend. In this case, you will be selling the digital currency so that you can buy it later at a lower price – thereby increasing your profits in the process (known as short-selling). Thus, you have to make more successful predictions than losing ones in this market to succeed.

Is it easy to do this? The answer is undoubtedly no. Nevertheless, you have to know this market very well and fully understand what forces drive the price of cryptocurrencies you are trading. If you know how to invest in the cryptocurrency market, the outlook can be less risky. And also more profitable for you than other novice competitors in the market.

But as a prelude to our main topic, which is Crypto Forecast, let’s examine the pros and cons of investing in the cryptocurrency market in the first place.

The pros of Investing in the Cryptocurrencies
  1. It has a very lucrative market. More specifically, Over the last year (2020-2021), Ethereum made 1,500% gains. Bitcoin gained about 400%. Dogecoin achieved over 15,000% gains.
  2. The market has positive outlooks and prospects.
  3. Most cryptocurrencies have cutting-edge technologies and projects underlying them.
  4. As time goes on, there is increasing acceptance and appreciation of it.
  5. Cryptocurrencies are easy to buy and sell.
The Cons of Investing in the Cryptocurrencies
  1. The industry is still in its infancy and can be very volatile. So, investing in cryptocurrency is highly risky. You will either make a lot of money or lose a lot of money.
  2. Digital assets are vulnerable to cyber-crimes.

The pros of Investing in the Cryptocurrencies

Invest in the Cryptocurrencies
Are Cryptocurrencies Predictable?

By nature, cryptocurrencies are chaotic & volatile and this feature makes them rather speculative and unpredictable. Despite the fact that these markets are highly unpredictable, if you’re prepared to take on a little risk and know well how to play this long game (i.e., if you know the rules of this game), and if you have a sensible strategy at hand, investing in the market will have the potential for significant returns.

Some Key Investment Rules and Strategies in the Cryptocurrency Market according to Crypto Forecast

If you plan to invest in the cryptocurrency market, keep in mind the following rules and tips to reap better gains:

  • Just choose the token that you believe/forecast will increase in value and make your investment. Meanwhile, set your investment strategy. Consider how long you are willing to keep your money in the chosen market. All investments offer varying levels of risks and potential for returns; thus, you had better consider a different time frame for each one, based on your financial needs and goals. If you do not need that money urgently, you can take a higher risk over a longer time to wait for your return; Hence, you will be able to cope with temporal drops in the markets. Keep in mind that the secret to building a successful portfolio of cryptocurrencies is to wait patiently. Additionally, remember that it is wise to allocate only the money you can afford to put at risk while investing in such volatile markets.

Crypto market cap tradingview
  • Monitoring the market very precisely and thoroughly is also a key to successful investment. Once you have made your investments, they will require careful attention. In other words, you should review and monitor all your invested cryptocurrencies regularly to analyze their position in the market, to ensure whether they are performing well against alternative coins or not, and whether they are doomed to fail or succeed. All investors are likely to make mistakes now and again, so it is worth learning and ensuring they don’t happen again. Try to review and track your investment portfolio monthly or weekly. Taking this step will provide you with deeper insight. You had better be aware of bullish or bearish trends in the market. Additionally, set Stop-loss and Take-Profit orders that will let you decide at which prices you want to close your position in the market. By extension, a stop-loss order is to exit the crypto market to prevent any further losses. Take-profit orders are the opposite, allowing you to exit the crypto trade once you have completed a specific profit target.

Some Key Investment Rules and Strategies in the Cryptocurrency Market according to Crypto Forecast

Make profit from Cryptocurrencies
  • Avoid the fear of missing out (FOMO). FOMO occurs when the price of cryptocurrencies increases, and this thought comes to your mind that everyone is selling, so you should also sell because you are afraid that you will lose the opportunity. FOMO also appears when you see a cryptocurrency that you have not invested in is growing. And then you sell the cryptocurrencies you own to buy it. So, try to avoid FOMO that is a very prevalent phenomenon in the cryptocurrency world.
  • Moreover, if you are looking to start a successful trading career – you should be willing to do your fair share of work. Many traders fail to understand the work required to achieve consistent profits and expect to make instant fortunes. However, in reality, if you want to make consistent returns, you should be willing to develop your cryptocurrency knowledge relentlessly. As a result, this involves taking time and educating yourself to understand how the cryptocurrency market works. First of all, you must learn the basics of cryptocurrencies. Almost certainly, you might have already heard of the most popular cryptocurrencies like Bitcoin for Bitcoin cloud mining and Ethereum. With that said, there are over 8,000 different digital currencies available on the market today that can provide spectacular financial opportunities for you. Keep in mind that learning how to trade cryptocurrency in a lucrative way is an ongoing process -the market is still in its infancy and, therefore, is susceptible to much more volatility than the more established financial investments. Once you’ve made your investment, it’s crucial to stay up to date with what’s happening in the crypto world and act accordingly, making sure you aren’t caught unaware by significant changes.

Crypto trading
  • However, if you want to be successful in the market, you will also need other resources and tools. Firstly, you should have data-driven insights so that you can make well-informed choices. Thanks to the internet – now, you have multiple online resources at your disposal to get the necessary help and guidance easily. Indeed, some savvy crypto experts, websites, analysis reports, and articles can help you predict the ever-changing flow of trade.
  • Also, Diversification is a key in every investment. In a nutshell, diversification means distributing your investment capital across multiple assets. As an example, CNBC finance writer, Darla Mercado, suggests that investors commit just 1% of their total investment capital to Bitcoin, thus gaining exposure to the market while minimizing risk through more conservative investments elsewhere. Similarly, tech investor Pondering Durian has invested less than 15% of his available capital in the digital market. How much of your capital you allocate to cryptocurrency investment is largely determined by how much risk you are willing to take. It’s also worth noting that you can diversify within the crypto sector. For example, BTC is a much more stable investment than Cardano, but the latter has plenty of potential for growth in the future. As such, you can include both coins in your investment strategy. Also, you can balance the comparatively risky ADA against the ‘safe bet’ that is BTC.
What Are Important Signals in the Crypto Market?
  • Supply and demand. Supply and demand is a fundamental principle in the financial sector, especially in crypto investing. Shortages increase the value of something, while excesses decrease its value. To put it in other words, The higher the demand and lower the supply, the higher the price of crypto.
  • Regulations. Most nations and jurisdictions are trying to deal effectively with digital currencies. As we have already noted, changes in legislation (For instance, the position of Japan and China in this regard) can have a significant effect on the rise or fall of the cryptocurrency market.
  • Technology, Function, and Vision. These important factors have a key role in supporting their related tokens in the market.
  • Many cryptocurrencies experience forks and upgrades (like Ethereum and Cardano) which can directly affect their prices in the market.
  • Compared to the past, although there are still skeptics about cryptocurrencies, their future now looks brighter than ever. Increasingly the authority, legitimacy, adoption, security, and reliability of cryptocurrencies have considerably evolved. Many banks, such as DBS Bank (Singapore’s largest bank), and powerful businesses, such as PayPal, MicroStrategy, Square, and Stone Ridge, have started their adventures in the world of crypto and invested heavily in this market. Furthermore, many high-level investors have put at least one digital currency in their portfolio – a trend that is expected to continue in the coming months and years. Moreover, it is interesting to note that even those who once criticized cryptocurrencies are now the most notable investors. For example, J.P. Morgan used to be critical of Bitcoin, and now he has invested in it. All these events and increasing demand will surely boost the value of cryptocurrencies in the future.

Crypto vision
  • Cryptos are also hypersensitive to media Following a tweet from Elon Musk on Twitter, the price of Bitcoin dropped 10% in just one day.
  • Community. If a cryptocurrency has a strong following, it means there is a good belief and trust in the crypto.
  • Fundamentals are also of utmost importance. For instance, who is behind the cryptocurrency? What is the company’s mission statement? Who is the founder? Are they transparent with their processes and thinking? Is there an experienced team working on it? And so on. For example, we mentioned the founder of Cardano was a co-founder of Ethereum. Undoubtedly, Charles Hoskins has applied the lessons from developing Ethereum to its current project and is now developing Cardano with his knowledge and experience. This feature gives a major boost to Cardano’s value in the market.
  • Market sentiment (whether there is a positive or negative outlook concerning the coin) is also essential in driving the price of cryptocurrencies.
The Bottom Line about Crypto Forecast

Making money in this market requires time, intuition, experience, talent, patience, and much good luck. Moreover, there are different ways and methods you can profit from the cryptocurrency market. It is including long-term investing, day trading, CFD trading, staking, and cloud mining by a cloud miner center. If you are an existing or prospective investor, you had better monitor the market prices very closely and intelligently. Hence, due to the market’s volatile nature, you will have the opportunity to purchase your intended cryptocurrency when its price is low and sell it as its price rises.

In general, a correct and timely crypto forecast can make you immensely wealthy; otherwise, you may lose your money and be left disappointed. Nevertheless, if you have spare money that you can afford to lose and have the patience and also time to track the market carefully and knowingly, investing in cryptocurrency can be a sensible and lucrative choice.

Conclusion

When you are in the cryptocurrency market, the important thing to keep in mind is that a timely purchase at the right time and the lowest price can guarantee your profitability to a large extent. To do a crypto forecast, it is necessary to perform a technical analysis of cryptocurrencies for short-term, medium-term, and even long-term periods.

Fundamental analysis of cryptocurrencies can also be a great roadmap for investors and traders in the cryptocurrency market for crypto forecasting. It can keep them away from extreme fluctuations and market excitement. If you are interested in the world of cryptocurrencies, you need to read about fundamental analysis and get acquainted with its applications in financial markets.

In crypto forecasting using technical analysis, note that technical analysis does not determine the basic factors that affect market volatility and raise or lower prices. If you know about hacking attacks, new laws, important news, and government policies, important agreements, and the introduction of new currencies, you can stay ahead of the crypto forecast. Finally, if you follow only one type of analysis, it is like going to the doctor only to treat the pain, while you also need a prescription and medication.

This article explains how to do a crypto forecast and prediction of the price of cryptocurrencies, but if you have any questions or ambiguities about buying and investing in digital currencies, you can use the content on the Minerland website.

2 responses to “How to do a technical crypto forecast?”

  1. Herve Fodouop says:

    Good informations

  2. Yanga Jili says:

    Useful information indeed

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